The Premium Phone Empire Strikes Back: Did the “Budget Flagship” Wobble in 2016?

Ever since Xiaomi and OnePlus turned the price-specs equation on its head in 2014 (at least in India), we (and many of our colleagues) have not tired of talking about how the whole perception of a flagship device has changed. And how consumers now will not easily cough up cash for just a premium brandname as they have been ‘spoilt” by new brands that offer high-specced devices at price tags that are a fraction of what the “established brands” charge.

That sounds good on paper. Entirely logical. People in “value conscious” markets should logically opt for devices that offer more at relatively lower prices. But 2016 seemed to kick this logic into the dustbin.

If that sounds difficult to believe, then just consider the array of “affordable” flagships released in the Indian market in 2016 – the LeEco Le Max 2, the OnePlus 3, the Asus ZenFone 3, the Xiaomi Mi 5, the Lenovo Z2 Plus, the YU Yutopia, Huawei Honor 8 and the Smartron t-phone. All of these devices came with the sort of hardware that you would expect on devices that cost much more. And were very well designed too – there was nothing remotely “cheap” or slapdash about them. Round that off with the fact that apart from the odd bug here and there, most of them were very good performers, and logic dictated that they should have pretty much dominated the market and given sleepless nights to the established order.

Well, judging by what we have heard from our sources in the market, and what we have seen, that did not happen. Definitely not at the level that we had expected. In fact, the only device from that group that lived up to what was expected of it was (oh the irony) one of the most expensive of the lot – the OnePlus 3. Almost all the other devices mentioned in the list did not exactly set the markets on fire, a few of them even received price cuts, and at least one worthy was gently withdrawn from the market altogether.

What was the reason for this? We cannot say for sure. One of the executives of a company did point out that if the budget flagships did not do well, neither did most of the high end ones. “Sony’s high-end Xperias, the LG G5, HTC’s high-end flagships, the BlackBerry Priv, even the Moto Z…none of them did well either. It was really about the iPhones and the Galaxy S7 this year,” he said. However, the fact is that in most of the cases of the flagships from the “established” brands, a “high price” was given as the reason for their alleged downfall. The budget flagships were supposed to have cashed in on this weakness. Clearly, they did not.

As per a few of our sources, a big reason for this was the perception that the budget flagships were not of the greatest quality. “Many of the budget flagships did not deliver the sort of experience that high-end devices from older brands did,” a sales person told us. “Actually things went badly wrong for them last year when many devices (like the Mi 4, ZenFone 2 and the OnePlus 2) turned out to be buggy and erratic. Many customers also had bad service and after sales experiences and now there is some amount of cynicism. There is also a feeling that you compromise on something when you buy a budget flagship – some devices might not have great cameras, some might not have the kind of storage other devices have…”

But surely that applies to exponentially more expensive flagships from other brands too? After all,the iPhone still does not have expandable memory. “Yes,” the sales person replied. “But for most people, devices like the iPhone and the Galaxy S7 or even the Note – yes, even after the recent accidents – are status symbols. Among the cheaper flagships, only OnePlus has that sort of status and that is mainly because of its very different design! Otherwise, there is no prestige in owning them.”

And perhaps therein lies the rub for the budget flagship brands. Yes, they do have a sizable price edge over the established players. But on the flip side, they cannot afford to err because even the slightest frailty on their part is seen as proof of the fact that they are cutting corners and are actually “sub standard” in the quality stakes.

India might be a price sensitive market. But if 2016 was an indication, you need more than an impressive price tag to succeed here. The premium phone empire might not be as formidable as it once was but it remains a force to be reckoned with.

Nimish Dubey Editorial Mentor Nimish Dubey has been writing for more than a decade now (well, Windows 3.1 was around and Apple was on the verge of being finished when he started). He has been published in a number of publications including The Times of India, Mint, The Economic Times, Mid-Day and Femina on subjects that vary from tech write -ups to book reviews to music album round ups. He managed to interview Michael Schumacher once and write two books for young adults along the way.